Buttonwillow Ginning Company, a Corporation v. Federal Crop Insurance Corporation, a Corporation
Opinion
Opinion
Duniway, J.
The Federal Crop Insurance Corporation (FCIC) appeals from a judgment declaring that it is liable under a crop insurance policy to the holder of a security interest in an insured’s damaged crops when the insured made no assignment of his rights under the policy to the holder of the security interest. We reverse.
I. Facts.
In April, 1982, Mohinder and Gurchain Athwal, grape and raisin farmers, borrowed $160,000 from Buttonwillow Ginning Company. The parties entered into a written Security Agreement which granted Buttonwillow a continuing security interest in the Athwal’s 1982 crop, “together with all proceeds derived from such crops.” Thereafter, Buttonwillow perfected its security interest in accordance with the requirements of California Commercial Code § 9303.
In August, 1982, the FCIC issued a Raisin Crop Insurance Policy to the Athwals, covering their 1982 crop against loss or damage. Paragraph 8 of the Appendix to the policy stated:
8. ASSIGNMENT OF INDEMNITY.
7 C.F.R. § 402.7 , H 8. The Athwals made no assignment to Buttonwillow of their rights under the policy. Later that year, rainfall seriously damaged the Athwal’s 1982 raisin crop.